Re-inventing the future by reckoning with the past and dealing with the realities of the present.
Detroit News business columnist Daniel Howes says that's what we're seeing with a major change in the big auto supplier Delphi.
Listen above for the full conversation or catch highlights below.
How the split worked
“There’s a new company trading on the New York Stock Exchange called Aptiv, and there’s another one called Delphi Technologies – which is the old engine management, internal combustion after-market piece of Delphi – on the New York Stock Exchange. So they split the company into two, and it’s really a bet on the future of where the industry is going toward electrification, autonomous driving, zero and/or clean emission engines.”
"In the last decade or so, they’ve gotten out of the commodity business and really focused on what they call ‘technologies that are safe, green, and connected,’ which I think was a real smart bet in terms of where the industry was going."
Pros and cons of a split
“I think the positive thing here is you can take an old Detroit asset and make it very attractive to investors, make a lot of money for investors, and have a successful going concern. The downside is they closed a lot of plants in the United States. They do not have a single UAW represented plan in the U.S. They’ve only got 3,500 employees roughly, or 4,000 employees in the U.S. and about 150,000 worldwide, so the U.S. is a much smaller piece.”
The leading edge
“You have to be on the leading edge of technology, and one of the things that Delphi or Aptiv has I think demonstrated in the last few years is they are on the leading edge of technology, and they’re giving the market what it wants. And if you are on that leading edge, you can be very successful and you can command higher multiples in the marketplace, number one, and you can vie for a lot more customers, number two.”
“It’s positioned itself on the leading edge, and their CEO said to me this week, ‘We have to stay there. This is all a technology game and, if we don’t stay there, all bets are off.’”
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